The very serious slowdown experienced by the Swiss watchmaking industry in 2016 had at least one positive effect – it provided a clearer view of things, revealed the strengths and weaknesses of all the players, prompted some self-examination and reshuffled the cards.
At the first sign that the tide was turning, the industry pointed its finger at the policy of a strong franc, then railed at the Chinese government and its anti-corruption campaign. It bewailed the sanctions against Russia, suffered the consequences of terrorism and kept its head down until the interminable US election campaign was over, while at the same fearing the emergence of smartwatches without, even now, finding any real solution.
There is no getting away from the fact that the reasons and responsibilities for this mother of all slowdowns also lie within the vast industrial and artisanal watchmaking sector.
In short, the designated guilty parties were all outside the watchmaking arena proper. But there is no getting away from the fact that the reasons and responsibilities for this mother of all slowdowns also lie within the vast industrial and artisanal watchmaking sector.
Put in cruder terms, the industrial watchmakers, brands and retailers have all, each in their own way, shot themselves in the foot (and the media, it has to be said, held the revolver). The industrialists staked their bets on inexorable growth which, they opined, would inevitably rise year after year, to the extent that today, they are finding themselves in a situation of serious overcapacity at every stage of the supply chain (on this, read our detailed investigation into mechanical movement oversupply, Europa Star 4/16).
The brands, most of which went along with the economic, mechanical and stylistic one-upmanship, are now finding themselves with huge stocks they do not know what to do with – apart from picking out the diamonds and melting down the gold cases in a bid to salvage what they can. As for the retailers, they no longer know which “network”, real or virtual, to turn to and have launched themselves into a price-cutting war which has fuelled the grey market and caused a profit-margin meltdown.
In short, the entire watchmaking sector, down to the very core of the system, is experiencing that “morning after” feeling and, even worse, the situation is not going to improve any time soon. Because to all the factors that have triggered this crisis, both external and internal to the watchmaking industry, we have to add the even more disturbing, nay taboo, question: are we seeing the emergence of a certain disenchantment with watchmaking? Is glorious horology, so historic yet so modern, losing its status as a social indicator? Is its prestige paling as it spreads to broader swathes of the population? Is horology running the risk of becoming a has-been?
To try to gain a better understanding of what is happening in the watchmaking sector and identify some leads for the future, we felt that the most revealing approach was to look at prices. As a fellow journalist so neatly summed it up (Yvan Radja in Le Matin Dimanche): “Disconnected from its customers after years of overpricing, the watchmaking industry has to reinvent itself.” But how?
It is impossible to go into every aspect of an issue with so many wheels within wheels, such numerous complications. But to try to get a clearer picture, Europa Star Time.Business probed, questioned and talked with a broad panel of industry players and observers: industrialists, watchmakers, distributors, retailers, clearance firms, analysts and others.
What about the price situation?
FEATURED IN THIS SPECIAL WATCH PRICES REPORT:
The great upheaval
Reshuffling the price cards
It’s the fault of…
An objective look
Denis Asch “I wanted to sell watches, not prices”
Price hike between 2000 and 2010, then the slump
All china’s fault?
“As soon as a price goes up, they look elsewhere”
The internet has changed the rules of distribution
To raise or lower prices?
A paradigm shift for distribution
“Retailers need to turn into gallery owners”
Source: Europa Star TIME.BUSINESS/TIME.KEEPER Dec. 2016 - Jan. 2017